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Issues:
- Penalty imposed under section 78 of the Finance Act, 1994 set aside by the Commissioner (Appeals). - Discharge of service tax liability by the respondents before the deadline of the Extraordinary Tax Payer Friendly Scheme. Analysis: 1. Penalty Imposed under Section 78: The appeal was against an order-in-appeal that set aside the penalty imposed on the respondents under section 78 of the Finance Act, 1994. The respondents were engaged in the business of providing tour operator services but had not registered themselves with the authorities. A show cause notice was issued demanding service tax for specific periods, and upon adjudication, the demand was confirmed, and penalties were imposed under sections 77 and 78. The Commissioner (Appeals) set aside the penalties under section 78, citing that the respondents had provided sufficient cause for the negligence in discharging their service tax liability. The Judicial Member considered the arguments presented and found that the respondents had indeed paid the service tax liability before the deadline of the Extraordinary Tax Payer Friendly Scheme, which provided immunity to taxpayers who paid their dues along with interest before a specified date. 2. Discharge of Service Tax Liability within Scheme Deadline: The respondents' consultant argued that the entire service tax demand was paid in November 2004, and they were covered by the Extraordinary Tax Payer Friendly Scheme introduced by the Government in September 2004. The scheme granted immunity to taxpayers who paid their service tax liability along with interest before a specific date. The Judicial Member noted that the respondents had complied with the scheme's requirements by paying the dues before the scheme's deadline extension. Referring to a previous Tribunal decision in the case of Bharat Securities and Services, it was established that taxpayers who registered and paid service tax within the scheme's timeframe were not liable for any penalty. Therefore, the Judicial Member dismissed the appeal filed by the Revenue, as the issue was found to be in line with the precedent set by the Tribunal in the mentioned case. In conclusion, the judgment upheld the decision to set aside the penalty imposed under section 78 of the Finance Act, 1994, as the respondents had discharged their service tax liability within the timeframe provided by the Extraordinary Tax Payer Friendly Scheme. The Tribunal's decision in a similar case supported the finding that taxpayers who met the scheme's requirements were not subject to penalties, leading to the dismissal of the Revenue's appeal.
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